Voice is Not a Commodity

New communication modes complement, rather than substitute for, older modes, says Stefana Broadbent, who leads the User Observatory at Swisscom. That ought to lead service providers to think in different ways about the "commodity" nature of voice, for example, since it does not appear that voice and new forms of communication, though widely used, are consumed in ways that make them functional substitutes. And if they are not substitutes, neither are they commodities.

Different modes are viewed as best for some sorts of communications, and get usedthat way, she essentially argues. And while you'd expect wired voice, mobile, email, text messaging (short message service) and instant messaging to be key modes, you might not expect blogging to be a communications mode, though Broadbent says blogging is, in fact, a form of communications, not media.

So what are the key user perceptions of appropriateness (Broadbent studied consumers, not enterprises)? Wired phones are for "public" communications and intended to communicate lots of information that is of general use to all members of a family, for example.

Mobile voice, on the other hand, is a personal channel. About 80 percent of calls from any user's handset are with just four other people, Broadbent finds. Mobiles are used for regular communication with best friends and family.

SMS is seen as more intimate channel, oddly enough with more perceived "emotional capability" than voice. SMS gets used only with best friends and family and "grooming" messages ("thank you", "I love you") represent about half of the messages. SMS is seen as a way to keep relationships alive. More than 50 percent of all grooming communications happen through SMS.

Email is used as an administrative channel to get tasks accomplished and share attachments such as photos with networks of friends or social groups. Email also gets used for communications of an "impersonal" nature (contacting retailers, for example).

Instant messaging tends to be a multitasking medium, with a live channel opened in the background while a user does other things. People just step in and out of conversations.

Blogging is a "networking channel," used in place of email in many cases and a way to extend the total number of "friends" one can interact with, as it allows one-to-many communications much more simply than email.

Significantly, says Broadbent, the new forms are not substitutional. Each new channel slowly redefines the uses of older media, and uses are very sophisticated about the strengths and weaknesses of each form. SMS gets used with people one knows very well because they have the context to decipher very short and cryptic messages.

A key takeaway from Broadbent's research is that though "price" is a factor in just about any purchase, communications are about other things as well, providing some space to innovate on the value front to create new levels of comfort with "price."

700 MHz Rules: More Impact than Carterfone

Though some might really have preferred mandatory wholesale rules for a portion of the 700 MHz spectrum, the "Carterfone" style "any compliant device can be attached to the network" provision will have much more impact than did Carterfone. Carterfone lead to widespread use of modems on the public network, initially by business customers who did not have to "ask permission" to do so. Consumers initially could "buy and own" their own phones instead of renting them from the phone company.

We also might credit the rise of much of the Interconnect and business phone system business to Carterfone.

Then, because modems could be used, we can further say that Carterfone helped pave the way for creation of the Internet itself. First dial-up access, then broadband access, became possible because of Carterfone. Because of broadband the visual and now semantic Web developed. These are significant effects, indeed.

But the 700 MHz spectrum should ultimately have more impact. We assume the C block will be assembled into a national network. We assume a high-quality, low-latency core, with short access "tails," and full mobility across the whole network.

The near-term impact will be significant. Device manufacturers will benefit, since they simply have to build equipment that complies with the technical specs. Users will benefit since they can use any handsets they choose. But there will be more impact, fairly shortly.

Because the new network will be based on IP (as well as Ethernet), there will be ways to provide VoIP, even if network operators try to wall off all voice services in the traditional walled garden. Technological cleverness will take care of that problem.

That is going to create a potential new "offer leader" in wireless. And recall that AT&T's "Digital One Rate" completely reshaped industry-wide packaging and pricing, not simply some of AT&T's offerings. The C block network potentially lays the framework for a service provider with some scale to reshape consumer expectations of what things should cost and how they should be packaged.

More significantly, the C block network potentially allows a provider some latitude to redefine the customer experience as well, creating new expectations of what media "should" be available, how they should work together and what the "right" price is for such capabilities.

We can't really predict what other developments might occur. I don't think one would have extrapolated the creation of the World Wide Web or VoIP from Carterfone. I don't think it is yet possible to extrapolate from the wireless equivalent of Carterfone, either.

But this is a bigger deal than most people assume. It just will take a while before the wider ramifications are seen. And by the time it happens, nobody will remember a relatively "small" regulatory decision.

No Wholesale? No Surprise

To almost nobody's surprise, the 700 MHz auction will not have a mandatory wholesale provision. We might argue that a robust "third" or "fourth" or "fifth" pipe would result. What is harder to argue is that any such pipe provider would be able to make the investments required, operate its network at a high level of quality and still return the required returns to investors.

Other wireless infrastructure initiatives highlight the problem. After reporting a $16.3 million second-quarter loss last week, EarthLink reiterated that it was reassessing its municipal wireless business. Revenue is the issue.

"Until we're confident that we can build new networks and get an acceptable return, we will delay any further new buildouts," CEO Rolla Huff said.

EarthLink has been one of the biggest builders of city wireless networks, with projects built or in the works in 13 municipalities around the U.S., according to its Web site.

The problem with wholesale access business models is simply that it is so difficult to earn an adequate return. In a competitive market, a provider needs both significant penetration and reasonable margin (40 percent is a common threshold). Wholesale makes that tough.

Video Behavior Changes After FTTH

This will not come as any great surprise, but the three top applications customers use when they get fiber to the home service are watching full-length video, online gaming and video on demand. If one looks at the top four activities, video represents three of four applications. Of the top seven apps, five are video apps. So suggests a survey conducted by the Fiber to the Home Council.

Voice Continues Wireless Shift

Wireless access "lines" not only outnumber wired lines by a three to one margin, wireless accounts now blow away wired lines in terms of growth, say researchers at the Organization for Economic Cooperation and Development. Which explains the attention now paid to seamless experiences in either the voice or Web realms. If so many people are going to spend so much time in mobile settings, then the things they might do on a PC or desktop phone have to be available on their mobile devices. Ideally, the context a user expects in a stationary or tethered experience also would be replicated in the mobile context as well. Price, while always a factor in a buying decision, is a matter of "hygiene."

If the price is wrong, no sale occurs. But price is not something that can make a user happy. Think of price as something that instead prevents a user from being "unhappy."

But even the right price makes a user "happy." The things that make users happy are on a different plane, entirely. Coolness, features, form factor, user interface and lots of other things people find they can do with a service and device are the essential parameters for driving "happiness." And the attempt to find "happiness" is what drives the purchase.

If you want people to buy something you make, you have to remember that "happiness" and "hygiene" are not on the same continuum. There are two different scales, and you have to be on the right side of each scale.

TeleBlend: More Steps to Ensure SunRocket Transition

In an effort to ensure it has the resources in place to manage a fairly sizable inflow of former SunRocket customers, should that occur, TeleBlend executives have signed an agreement with Sherwood Partners, the entity winding down SunRocket, for hardware and software assets that will make any customer transition seamless.

TeleBlend, a “preferred” provider for former SunRocket customers, is offering these customers a heavily discounted monthly subscription rate of $12.95 for the duration of their previous annual contract with SunRocket.

We won't know more until this afternoon, but it seems logical to assume the deal gives TeleBlend ensured access to in-service analog terminal adapters and the provisioning and operating systems used to keep them in service, at least through any transition period where customers are moved over the existing TeleBlend back office and network.

The agreeement does not seem to affect the earlier "preferred supplier" deals Sherwood struck with Packet8 and TeleBlend.

Verizon Bends on Net Neutrality

Lowell McAdam, chief executive of Verizon Wireless, says the company would agree to 700 MHz spectrum auction rules requiring the network operator who wins a portion of the spectrum to allow any device onto its network.

Such a nod to the wireless equivalent of "Carterfone" suggests Verizon now believes some such requirement will be part of license rules for the 700 MHz frequencies. The compromise won't go far enough to satisfy contestants who think a mandatory wholesale regime is needed.

But the move would for the first time allow users to buy and use virtually any device of their choosing on the network. As much as wireless carriers might like to preserve their ability to lock all devices used on their networks, device independence would be quite helpful for end users, application developers and device manufacturers, since it would allow some degree of innovation without the direct cooperation of the network services provider.

Verizon draws the line at guarantees that all games, video and the Web applications on the new phones or devices will work on anything other than a best effort basis, in essence, however. Verizon also said it would reserve the right to continue blocking certain applications and features for phones it sells, if it were to operate networks under such rules.

at&t earlier had signaled that it wasn't going to stand in the way of such rules. Some people might not think half a loaf is worth having. But Carterphone was a very important advance, as this also would be. Verizon arguably would not be shifting its stance were it not convinced the move is inevitable in any case.